The Michigan Economic Development Corporation is the state’s
official "jobs" department. It runs and champions a variety of programs to help
facilitate economic development. But the MEDC ignores one economic policy
prescription that would likely facilitate robust job creation. The policy,
commonly known as "right-to-work," has been adopted by 22 other states. If the
MEDC were serious about job creation, it would be cheerleading for right-to-work
legislation in Michigan.
"Right-to-work" laws simply say that no one can be compelled to
join or financially support a labor union as a condition of employment. Research
strongly suggests that it positively influences economic growth in states where
it is adopted.
Since the MEDC’s creation, Michigan has lost 323,200 jobs,
283,100 in manufacturing alone. From 2000 to 2007 Michigan’s per-capita personal
income rank among the states has fallen from 16th to 26th and now stands at 9
percent below the national average. We also have the highest unemployment rate.
Moreover, the Mackinac Center has empirically shown that the MEDC’s chief
development program, the Michigan Economic Growth Authority, has effectively had
no impact on job creation or per-capita personal income in the state.
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As long as the MEDC exists it should do one thing noticeably well to help facilitate job creation: advance right-to-work legislation. | |
During the MEDC’s lifetime its officials have argued in favor of
new state laws and programs in the hope of spurring real growth. At times, the
MEDC even commissioned studies used later to champion their involvement in a
particular industry, such as broadband deployment.
Last year the Mackinac Center sent a Freedom of Information Act
request to the MEDC asking for, among other items, any "memos, staff e-mails,
and letters regarding right-to-work or compulsory unionism." The Center was
curious as to whether or not state development officials had ever discussed the
value of a right-to-work law for Michigan. The MEDC’s official response was to
deny the request because "they [the documents] do not exist."
In addition, Jim Epolito, chief executive officer of the MEDC,
said last year in a Lansing debate with Mackinac Center President Lawrence W.
Reed that "… you think all we have to do as a state is be a right-to-work state
and all these businesses are going to start pouring into Michigan. Nothing could
be further from the truth; nothing is a more ridiculous assumption than that."
But is it ridiculous?
The economic performance of right-to-work states can be measured
and then compared against non right-to-work states. Let us consider a few
measurements and start with the most powerful observation: cross-border
employment activity.
Robert Holmes, a University of Minnesota economist writing for
the Minneapolis Federal Reserve, examined manufacturing employment in adjoining
counties on each side of state borders where one state maintained a
right-to-work law and the other did not. He then measured manufacturing
employment as a percent of each county’s population and found, on average, that
manufacturing employment leaps by about 33 percent simply crossing into the
state with right-to-work protections.
The reason that this 1996 study, "The Effect of State Policies
on the Location of Manufacturing: Evidence from State Borders," is so important
is that it effectively eliminates non-policy related determinants of growth,
such as geography, from consideration. For instance, the weather in Kentucky’s
Fulton County is the same over the border in Tennessee’s Weakley County, as are
likely attitudes toward unions, agricultural conditions and other important
variables.
In addition to these cross-border comparisons, there are
mountains of comparative data that at least suggest a strong right-to-work
influence on growth. Oklahoma adopted right-to-work protections in 2001. In the
six years after passage, Oklahoma’s per-capita personal income grew 27 percent
faster than the national average. In the six years prior to passage, its
per-capita personal income grew at roughly the national average. Maybe that is
just a coincidence, but then again maybe it is not. Data such as this and more
can be found at the Center’s special right-to-work resource page at
www.mackinac.org/8527.
The MEDC has never been necessary for Michigan’s economic well
being, but as long as the MEDC exists it should do one thing noticeably well to
help facilitate job creation: advance right-to-work legislation.
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Michael D. LaFaive is director of the Morey Fiscal Policy
Initiative at the Mackinac Center for Public Policy, a research and educational
institute headquartered in Midland, Mich.
Permission to reprint in whole or in part is hereby granted, provided that the
author and the Center are properly cited.
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